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Thursday, January 19, 2012

MUST READ article on the opening of the PAGE and potential implications to the gold and silver manipulation.

When the PAGE comes online in June 2012, authorities at LBMA and COMEX will find that they can no longer manipulate the gold price by raising the margin requirements of the gold contracts without the agreement of the Chinese at the other side of the Pacific In other words there will be a ‘sea change’ in the price discovery of gold because gold will soon be traded in a more transparent and level playing field. In the past the losers are mostly the small and uninformed investors who invested their honest and hard earned money. So, with the PAGE, it will in a way help regularize the price of Gold. The interesting point is what will happen to the price of Gold when LBMA and COMEX raised the margin requirement but on the other side the Chinese refuses to follow suit? This will cause a differential in the pricing of gold at both ends. Gold will be cheaper in the US and Europe due to the selling pressure from margin calls while on the other end it will be more expensive relative to the West. Eventually due to the price differentials, the supply and demand factors will work its way through the markets and the eventually the price of gold will converge or rather reach an equilibrium. Hence, it will be much more difficult for the powers to be to manipulate the gold market.

PAGE is not something that can be taken lightly as it is part of China’s 12th five year plan to catapult China to be the Global Superpower in Economics, Politics and Military.Currently Shanghai Gold Exchange and Shanghai Futures Exchange are the only avenues for an ordinary Chinese citizen to buy gold. With the PAGE, now they will be able to buy gold through their computers online. Initially the scheme will be open to the 320 million customers of the Agriculture Bank of China.Eventually foreigners will also be able to trade the International Spot Contracts on PAGE and hence this will help increase the liquidity of the market and certainly will have a big impact on both the LBMA and COMEX . With PAGE the purchaser will receive a 90 days International Spot Contract with the actual title bearing the name of the purchaser. All transactions initiated either by a local or foreigner will be denominated in RMB. Investors are given a choice to take physical delivery or get paid in RMB.The setting up of PAGE is not a ‘spurred of the moment’ event but a carefully crafted strategic development in the key areas of China’s planned financial dominance in the next few decades. China’s dominance in the Banking world have already been felt and currently the top three biggest bank by market capitalization in the world are Chinese, namely ICBC, CCB and the Agriculture Bank of China..Read more:

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